Service tax is not leviable on tickets issued prior to October 1.
NEW DELHI, SEPT 28:
Service tax on AC class train fare will not be realised on tickets purchased before October 1 as railways modified its earlier decision on it.
Fares of AC First Class, Executive Class, AC-2 tier, AC-3 tier, AC Chair Car will go up by 3.708 per cent from...
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October 1 with the service tax coming into force on these services.
“However, service tax is not leviable on tickets issued prior to October 1, and it would not be collected on board and railways have modified its earlier order on it,” said a senior Railway Ministry official.
“Since service tax is leviable from October 1, it will be collected on the tickets issued on or after that date,” he said.
The earlier order stated that the service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation.
“In case of tickets already issued excluding service tax, it will be ensured that the same is recovered either by TTEs in the train or by the booking offices before commencement of journey,” as per the earlier notification issued by railways.
Besides AC fares, railways is levying service tax on freight and auxiliary service such as catering and parking at stations.
The service tax is 12.36 per cent but after adjustment of 70 per cent of this, it will effectively be 3.708 per cent on passenger fares in AC classes and freight services.
It is expected that the exchequer will be richer by about Rs 3,000 crore from service tax on AC fares and freight.
In case of cancellation of tickets, service tax will be refunded by railways, the official said.
Passengers travelling in AC classes were brought under service tax from July this year as per the Finance Bill 2012 but the levy had since been kept in abeyance because of opposition by the TMC.
Keywords: No service tax, train tickets, AC class train fare, Railways, modified decision, fares of AC First Class, Executive Class, AC-2 tier, AC-3 tier, AC Chair Car, service tax, coming into force

Procedure Order for Implementing Service Tax Refunds on Passenger Fare Tickets Booked and Cancelled on or after 01.10.2012
GOVERNMENT OF INDIA
MINISTRY OF RAILWAYS
RAILWAY BOARD
No.TCII/2910/2012/Service Tax
New...
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Delhi dt. 29.09.2012
Commercial Circular No. 60 of 2012
The General Managers,
All Indian Railways
Subject: Procedure Order for Implementing Service Tax Refunds on Passenger Fare Tickets Booked and Cancelled on or after 01.10.2012.
This refers to Commercial Circular No.59 of 2012 on the levy of service tax on transportation of passengers by Rail in Air-conditioned classes and 1 AC Class. The following has been stated therein:
In case of cancellation of tickets booked by the passengers on or after 01.10.2012, service tax can be refunded by Railways except for the portion of service tax on the amount of cancellation charges retained by the Railways.
2. The following procedure shall be followed for the afore mentioned refund of service tax:
i) Service tax will be leviable only on the cancellation/clerkage charges retained by the Railways at the rate of 3.708% on the charges retained. The remaining portion of service tax collected at the time of booking shall be refunded along with the refundable fare portion.
ii) This will be applicable only to cancellation of AC Class/First Class tickets booked by passengers on or after 01.10.2012.
3. As the changes in the PRS and UTS cancellation module and accounting module will be made effective by 10th of October, 2012, the following manual refund procedure shall be followed in the interim period, that is, between 01.10.2012 and 10.10.2012:-
i) In case of cancellation of AC class and First class tickets booked on or after 01.10.2012, service tax to be refunded would be done manually by Railways at the booking counters. In order to facilitate the refund process, the amount to be refunded would be displayed through PRS on the cancellation form itself of the PRS terminal.
ii) The accountal of the amount of service tax refunded manually shall be maintained in a separate register. The details of service tax refunded shall also be endorsed on the cancellation ticket by the booking deck.
iii) For cancellation of e-tickets including dropped waitlisted e-tickets, IRCTC will refund the service tax to passengers from the e-ticketing front-end application and account for the same with Railways. The details of the amount of service tax to be refunded on the cancelled e-tickets would be sent by PRS to IRCTC while cancelling the tickets and service tax should be refunded in the same manner as refunds done for other cancelled tickets.
4. With effect from 10.10.2012, refund of service tax will be granted by the system itself, through the PRS and the UTS cancellation and accounting modules.
Please note and notify accordingly.
sd/-
A. Madhukumar Reddy
Executive Director, Passenger Marketing,
Railway Board
Source: www.indianrailways.gov.in